January performance proved to be a remarkably poor forecaster of full-year returns in 2021, as a small loss that month turned into a monster 28.5 percent gain. Investors can only hope for the same in 2022 with the S&P down around -9 percent year to date.
Energy stocks have so far been notable exceptions. The S&P 500 Energy Sector Index up nearly 18 percent year to date. And even long-suffering midstream energy stocks are higher, with the Alerian MLP Index’ value rising more than 9 percent even without including the massive dividends this group pays.
Energy stocks, of course, are not immune from major market corrections. And if we are indeed starting one, we can expect prices of even the best in class to retreat from current levels, before they advance again.
If prices do come down in the next several weeks, we’ll consider it another major buying opportunity for the recommendations in our Model Portfolio and High Yield Energy List, especially for investors who are still under weighted in the sector. Putting this another way, a meaningful stock market correction is likely to also bring down commodity prices and related stocks. But that alone won’t undermine the economics of this emerging energy price cycle. And so long as that’s the case, any damage to positions now will be temporary.
The powerful forces behind the energy cycle are showing up once again in graphic relief in the Q4 earnings and guidance updates of companies we track in Energy and Income Advisor. We highlight what’s important from we’ve learned so far in the Feature article Roundtable.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on May. 25, 2022
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Roger Conrad’s coverage of more than 70 dividend-paying energy names.